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Afer years o population decline, Philadelphia has once again becomea desirable place to live. Although this is a sign o progress it has alsomeant that many long term Philadelphia residents have been displaced.

Between 2000 and 2012, in the gentriying portions o West, South, andNorth Philadelphia, housing prices skyrocketed, while incomes shrank.

During that same timerame, the Arican American population in thoseneighborhoods deceased by 22%-29%. Meanwhile, the Caucasianpopulation increased.

The number o new high-end market-rate housing units is increasing byroughly 2,300 units per year every year or the past ive years. This adds750 new single-amily or-sale homes and 1,550 new rental units eachyear at a rate that ar out-paces new affordable housing units, despitePhiladelphias ongoing affordability crisis.

And we are seeing that with market-rate housing development, thereis an increase the demand for affordable housing.As new residentswith higher incomes move to Philadelphia, they spend money here thatthey previously would have spent elsewhere. This means an increase orthe Citys tax base and support or new jobs, ofen or low-wage workers.

2016 UPDATE ||PHILADELPHIA COALITION FOR AFFORDABLE COMMUNITIES

CHANGE IN INCOME VERSUS

HOUSING COSTS

Sources: 2000 U.S. Census, 2008-2012 AmericanCommunity Survey 5-Year Estimates, and Cityof Philadelphia Office of Property Assessment

Change in Median Home Sale Price,2000/2002 - 2012/2014*

Change in Median Gross Rent,2000 - 2012*

Change in Median Household Income,2000 - 2012*

*adjusted to 2012 dollars

A NEW STRATEGYTO KEEP COMMUNITIES STRONG

HOUSING IMPACT FEES

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WHERE ELSE HAS THISBEEN DONE?As o 2015, cities in Floridaand Caliornia had adoptedhousing impact ees to supportaffordable housing development.In Caliornia, the ees per squareoot ranged rom $3.76 in SantaRosa to $18.90 in Fremont,underscoring the need to pricethe ee appropriately to what thelocal housing market can bear.6

WHAT IS AHOUSING IMPACT FEE?A Housing Impact Fee is a eeper square oot on new market-rate housing development usedto und affordable housing or

other community uses.5Theseees seek to offset the negativeimpacts o new market-ratehousing on neighborhoodaffordability.

Potential Revenue from Market-Appropriate Impact Fees in Philadelphia

TABLE 1

POTENTIAL FEEIMPACT

FEE PERSQUARE

FOOT

AVERAGESQUARE

FEET

ANNUALUNITS

PRODUCED

ANNUALREVENUE

For-Sale Units(750 units peryear with no ee)

High $4.40 2,000 664 $5,800,000

Medium $2.20 2,000 732 $3,200,000

Low $1.10 2,000 750 $1,600,000

Rental Units(1,550 units peryear with no ee)

High $4.80 1,000 1,329 $6,400,000

Medium $2.40 1,000 1,489 $3,600,000

Low $1.20 1,000 1,531 $1,800,000

THE

COSTS New residential development is changing the affordability landscape.

Market-rate development drives up rents, and renters are particularlyvulnerable to displacement. In North, South, and West Philadelphia, 50%o renter households are housing cost-burdened, paying more thanthey can afford or their rent.

The affordability gap is growing.

In 2000, Philadelphia had an affordable housing gap o 50% or renterhouseholds earning less than $20,000 per year, meaning HALF ofthese low-income households (or more than 57,400 households)

did not have an affordable option in Philadelphia.1

By 2010, Philadelphias affordable housing gap had grown to71%,with nearly 83,000 households unable to ind an apartment orrent within their means.2

Market pressures and rising rents orce long-term residents to move,neighborhood-serving businesses to shutter, community gardens andarms to up-root. Without an intervention, market growth comes at toohigh a price or low-income amilies, small businesses, and communitygreen spaces in Philadelphias gentriying neighborhoods.

A Housing Impact Fee levied on new market-rate residential developmentwould create a new dedicated revenue stream or the PhiladelphiaHousing Trust Fund to use toward affordable housing development,home repairs or low-income and disabled residents, homelessnessprevention, and community garden preservation, ensuring that our citysneighborhoods remain livable or all Philadelphians.

Based on the current pace o market-rate residential construction inPhiladelphia, and market research on local development costs and howmuch o a ee the Philadelphia market will bear, a Housing Impact Feecould generate between $3.4 million and $12.2 million per year.3

OF UNCHECKED

DEVELOPMENT

Philadelphia needs a Housing Impact Fee. City governmentmust take action to curb the displacement that is destabilizing our

communities. This requires adopting public policy that encourages air and

equitable development.

WHAT NEEDS TO BEDONE?

50%OF HOUSEHOLDS EARNING LESS THAN 20,000 PER YEAR COULD NOT FIND AN AFFORDABLE HOME

71%OF HOUSEHOLDS

IN 10 YEARSTHE AFFORDABLE HOUSING GAPGREW BY 42%

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Because Housing Impact Fees increase development costs, pricing the eeappropriately is important so as not to deter uture growth and investment.

At the high rate, the Housing Impact Fee would reduce market rateactivity by an estimated 12-14%

The medium rate would reduce market rate activity by 3-3.6%

The low rate would reduce market activity by 0.7-0.9%4

Balance is key, and the medium rate strikes the right balance between anestimated possible reduction in market rate activity o less than 4% (or 78units per year) in exchange or 427 low-income amilies per year whosehousing needs could be met.

I the medium-rate impact ee is levied, the $6.8 million that would begenerated annually or the Housing Trust Fund would leverage another$45.5 million in public and private dollars, together yielding $77 million ineconomic impacts in the Philadelphia economy as well as $1.2 millionin tax revenues to City of Philadelphiaas a result o the construction andrenovation work unded by the new Housing Trust Fund dollars.

The economic impact o $77 million ar exceeds the investment inconstruction that would be lost due to the impact ee, which totalsonly $14.5 million.

TABLE 2Anticipated MarketResponse to DifferentHousing Impact FeeRates in Philadelphia

HOUSING IMPACT FEE SCENARIO HIGH MEDIUM LOW

Assessment Rate $4.40 - $4.80/SF $2.20 - $2.40/SF $1.10 - $1.20/SF

Decrease in Ownership Units(750 units developed per year with no ee)

86(-11%)

18(-2%)

0(-0%)

Decrease in Rental Units(1,550 units developed per year with no ee)

221(-14%)

61(-4%)

19(-1%)

Decrease in Total Market-Rate Units(2,300 units developed per year with no ee)

307(-13%)

79(-3%)

19(-1%)

Revenue Generated $12,200,000 $6,800,000 $3,400,000

Low-Income Families served by

Housing Impact Fee Revenue7765 427 213

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Again, the PHILADELPHIA COALITION FOR AFFORDABLE COMMUNITIES(PCAC) calls on Philadelphias elected officials to adopt a progressivepolicy that will capture the beneits o the residential growth underway in ourcity and ensure that people o all incomes can afford to stay in Philadelphia,

and in their communities, or decades to come.

City Council must pass Housing Impact Fee legislation that applies afee for all new market-rate residential development in Philadelphiato support sustained affordability and increased access to affordable,accessible housing and green space.

By collecting ees o $2.20 per square oot or new market-rateor-sale homes and $2.40 per square oot or new market-rate rentalunits, such legislation could generate $6.8 million or the HousingTrust Fund EVERY YEAR!

www.phillyaffordablecommunities.org

215.600.1571 || @phillystaysput

The proposed Housing Impact Fee (o $2.20/SF or new market-rate or-salehomes and $2.40/SF applied to new market-rate rental units)would raisean estimated $6.8 million in resources or the Philadelphia Housing TrustFundper year.

The Philadelphia Housing Trust Fund could use the $6.8 million to support:

136 units o newly-constructed affordable rental apartmentsAND

85 existing homeowners seeking critical improvements through theBasic Systems Repair ProgramAND

51 home rehabilitations through the Adaptive ModiicationsProgramAND

155 households acing homelessness receiving utility and mortgageassistanceAND

136 grants for capital improvements and inrastructure incommunity gardens and ood-producing green spaces

EVERY YEAR!

Investment by Philadelphia

Housing trust fund

AllocationPercent

of newdollars

Costhomes &

Gardensper Year

New affordable rental apartments $3,400,000 50% $25,000 subsidy/home 136

Home repairs through Basic SystemsRepair Program

$680,000 10% $8,000/home 85

Home rehabs through AdaptiveModifications Program

$1,020,000 15% $20,000/home 51

Homelessness prevention $340,000 5%$2,200/grant or utility or

mortgage assistance155

Grants for community gardens & food-producing green spaces

$1,360,000 20%$10,000/capital improvement

grant136

Total annual estimatedhousing impact fee revenue $6,800,000 100%

Estimates of unit production, renovation, and garden grants per yearare based upon the following funding assumptions:

WITH THE

HOUSING IMPACT FEE

TABLE 3

END NOTES1

2

3

4

5

6

7

Affordable Housing Gap research by Dr.Amy Hillier, 2013.

Ibid.

Exploring the Relationship between NewMarket Rate Residential Developmentand Affordable Housing Need. EconsultSolutions. 12 Jan 2016.

Ibid.

Inclusive Communities Toolkit. NationalHousing Conerence. 2015.

Exploring the Relationship between NewMarket Rate Residential Developmentand Affordable Housing Need. EconsultSolutions. 12 Jan 2016.

Numbers based on calculation detailed in

Table 3.